Minimum wage should be tied to inflation: Ontario businesses

As the government of Ontario begins consultations about how to set the province’s minimum wage, the Ontario Chamber of Commerce (OCC) says it should be tied to inflation.

In a report, the OCC is urging the Ontario government to introduce a new process that would link changes in the minimum wage rate, currently $10.25 per hour, to the Consumer Price Index (CPI), an economic indicator that captures changes in the cost of living.

“Tying the minimum wage to the CPI will bring predictability to the process,” says Allan O’Dette, president and CEO of the OCC. “It will allow businesses to plan for increases in their labour costs and protect the long-term purchasing power of workers earning minimum wage.”

Ontario’s minimum wage rate is currently determined on an ad hoc basis and through unspecified criteria, exposing employers to unexpected increases in the cost of doing business, according to the OCC.

“Ontario, British Columbia and the Northwest Territories are the only Canadian provinces [and territories] that do not have a formal mechanism for calculating or adjusting the minimum wage,” the Ontario Ministry of Labour said in a July press release.

In a recent OCC survey, 60% of employers in the retail, hospitality and leisure sectors say a minimum wage increase would hurt their businesses and force them to lay off workers.

Ontario’s minimum wage has increased 50% in the past 10 years, giving the province one of the highest minimum wages in Canada, according to the Ontario Ministry of Labour.